Bridging the Gap between IFRS 17 and IFRS 9

As insurers begin to understand the implications of implementing IFRS 17, a key consideration is the interrelationships between IFRS 17 and IFRS 9 and how these can be maximised to their advantage.

Key takeouts from this report

IFRS 17, the new Insurance Standard focusing on insurance liability reporting, will have far-reaching consequences for an insurer in terms of modelling, data, processes and systems; ultimately resulting in a fundamentally different statement of comprehensive income and more onerous disclosure requirements.

However, as insurers contemplate the expected impact of the Standard, they need to be aware of the interrelationship with the Financial Instruments Standard – IFRS 9 – which impacts the valuation of insurers’ assets for accounting purposes.

The synergy between IFRS 17 and IFRS 9 needs to be considered in terms of:

the changes required by the two Standards; and

the complications arising from having two separate effective dates that may be several years apart.

What our experts say

Insurers would be ill-advised to start an IFRS 17 implementation project without a detailed assessment of the impact of IFRS 9 at the same time. Such an assessment would consider the implications on Asset-Liability Management, the changes required for impairment modelling and hedge accounting as well as the choices available to mitigate the effects of different implementation dates.

To help you on your journey to implementation, Deloitte has a wide range of impact assessment tools for IFRS 17 and IFRS 9 as well as simulations of the changes in the profit profile that will be caused by the new IFRS 17 accounting regime. Deloitte has a multi-disciplinary team including accountants, actuaries, IT system specialists and business process experts, who benefit from a global IFRS 17 and IFRS 9 implementation campaign providing the depth and breadth of experience to efficiently and effectively implement both standards together with management.